The address is Old Paradise Street, but it has to be said that the
neighborhood isn't as attractive as it sounds. It's to be
found in the borough of Lambeth in London--in fact, just around the
corner from the legendary Lambeth Walk, featured in the hit Broadway
musical "Me and My Girl." But the twisting, narrow streets are
dominated by the huge brick railway arches, and every few minutes a
train goes rattling by overhead, shaking the dim little workshops that
are housed underneath.

It comes as a pleasant surprise then, when you finally locate the
bright new, architect-designed headquarters of the Costa Brothers Coffee
Co., opened last December and only a short walk away from the original,
slightly Dickensian roastery. As it happens, the new premises should
have opened years ago, but soon after the contractors started work on
the site they uncovered the foundations of a series of buildings dating
from the long Roman occupation of Britain, so the entire project had to
be halted while the archaeologists carried out an inch-by-inch survey.

Not that managing director Sergio Costa was in any position to
complain, since the problem was created in the first place by his own
forebears. The Costa family originally came to London in the early
60's from the Borganoro valley in Italy. The Costa operation, a
combination of carefully styled "coffee boutiques," franchise
outlets and a healthy list of high-class hotel and restaurant clients,
began because of an encounter more or less straight out of Dale
Carnegie.

"At the beginning of the 60's, I was a singer with a
cabaret band called `I Rebelli,' the Rebels, and although we used
to perform in West End clubs the money was poor, and to make a proper
living I had to have another small job in the financial district of
London, the City," explains Sergio. And then came the Chance
Encounter of the Commercial Kind.

"I more or less bumped into a man who was struggling with some
heavy cases, so I helped him to carry them into his premises. He was a
city coffee roaster; we had a cup of coffee or two, and he ended up
offering me a job in his coffee firm, at 25 [pounds] a week." The
man and the enterprise were ideally matched.

"Because of all my connections in the local Italian community
I managed to double the business, and he gave me a 25 percent
shareholding. It was the first time I ever sat in a big city boardroom.
But he wanted to relax, to enjoy his golf and cricket, so in the end I
gave back his shares and set up on my own in small premises under
Fenchurch Street station, in the older part of the City. We called
ourselves Costa Coffees because we couldn't thing of anything
better." Sergio now has 99 percent of the company and his wife
Yolande the remaining one percent.

It was the right time for a new coffee service, and especially an
Italian one. This was the time of Britain's great coffee bar boom,
when Youth with a capital Y first began to display its independence by
drinking endless cups of frothy cappucino while discussing the woes of
the world and listening to very early British rock performers.

But then, almost overnight, the coffee craze evaporated, as young
people took to less conventional pastimes.

"The espresso era just collapsed," recalls Sergio.
"Gaggia stopped doing business with Britain, and the local Faema
operation went into liquidation. So I decided that the best thing would
be to teach the British to make good coffee on their own." He had
comforting memories of Italian coffee, but then he discovered that it
didn't at all taste like it used to at home. He solved this mystery
simply, by taking three gallons of London water to Italy, where it made
a predictably evil brew, and then bringing back three gallons of Italian
water, which produced an excellent cup.

"So, I began to experiment and in the end we found a blend
that suited the hard London water. We called it Mocha Italia, and
we've stuck to it ever since. In fact, it accounts for around 86
percent of all our sales. It's a blend of seven origins--South
American, with a little African, and a medium-full roast."

To publicize his coffees Sergio tried to advertise the Costa name
on the familiar, square-shaped London cabs, but at the time the
licensing regulations prohibited this. So he bought six of the cabs for
his sales force to use, and embellished with the Costa advertisements.
"The local authorities made some threatening noises to start with,
but in the end they let us alone, and nowadays all cabs are allowed to
carry ads," said Sergio, with a satisfied smile.

To begin with, Costa concentrated on supplying hotels and catering
operations, but after six years it chanced that Yolande Costa became a
little bored with life. In 1975 Sergio took out a lease on a tiny, 184
square foot shop at London's big Victoria station, and Yolande
tended shop.

"For a while I was afraid we mightn't take enough to
cover the rent," recalls Sergio, "but then my father taught me
how to make really good, old-fashioned Italian ice-cream. It had to be
mixed by hand in one of the final stages, and although the customers
were sometimes astonished to see me at it, it was good ice cream--just
eggs, cream and sugar, all the best ingredients." But the coffee
sold well, helped by useful ideas like the order formes that commuters
could fill out in the morning, noting preference and quantity, to
collect on the way home.

Using the same principle, and styling each new boutique
individually to match its location, Sergio Costa has built up a chain of
20 outlets between London and Inverness in the Scottish Highlands. the
city of Glasgow, which also has a substantial Italian population has
three so far, and there are four in Edinburgh. Most are at mainline railway or important subway stations.

The most recent addition was opened at a new shopping mall at
Reading station, west of London, in April this year, and Queen Elizabeth II was happy to a pay a visit to the new boutique when she opened the
complex.

There are Costa boutiques overseas, too, in shopping malls in
Dublin and in the Arab Emirate of Quatar, but the immediate growth is
continuing in Britain, with a franchise operation that one of the
country's biggest supermarket chains is testing in key stores.

What you will not see on any supermarket shelf, however, is a pack
of Costa coffee; the company has set its face against joining the
nerve-racking Battle of the Brands, where the big British and
multinational coffee companies slug it out for market share with an
unending barrage of high priced marketing. Instead, Costas concentrates
on what it knows and does best. In addition to the boutique/franchise
side of the operation, it supplies some of the country's best restaurants and hotels."

In addition to the catering packs of Mocha Italia in 250 and 500kg
flavor-lock vacpacks, the company offers nine other
"formulas," including Cappuchino, and French and Viennese
blends. Its menu also incudes nine single-origin coffees, including the
top Kenyas, Colombians, Costa Ricas and Sumatras, plus two water-process
decafs. All come either ready ground or in whole-bean form.

It all seems to have progressed pretty smoothly, but the company
has had to share all the industry's past woes. What did you do in
1976, when the prices went crazy, I asked Sergio.

"Apart from praying, you mean?"

With green prices now as low as they've been for years, Sergio
Costa will continue to pursue his crusade of educating the British
palate. At all the boutiques, anyone who buys a pound of coffee is
treated to a cup of fresh coffee, and this has in turn helped no end to
stimulate the takeout trade, which can account for anything up to 20
percent of turnover.

He faces the future with confidence, too...but with one important
reservation. "Consumption of R&G coffee in Britain can only
grow, but my fear is that with green prices the way they are the
producers will be tempted to send over rubbish, because if the prices go
too low they mightn't bother to grow the good stuff.

"That apart, there's still room here for quality and
service. If you offer those you'll not die through loss of
business."

PHOTO : Queen Elizabeth II visited the Costa Boutique in a new
shopping mall in Reading, west of

PHOTO : London, in April. She was introduced to Yolande and Sergio
Costa (left) after the opening

PHOTO : ceremony.

COPYRIGHT 1989 Lockwood Trade Journal Co., Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.